Understanding The Effect 'Risk On' Has On NZD/USD

If you look over the main USD pairs (GU/EU/NU/AU/UC) you will notice that the drag on antipodeans and USDCAD is way harsher than it is on the EU/GU.

That's because of the effect risk markets have on risk currencies.

When there is confidence in markets, AUD, NZD and CAD are more vulnerable to inflows as traders are willing to take on more risk and bet on them. So as we are seeing USD strength now, it is being counteracted by strength in AUD, NZD, and CAD but not EUR and GBP.

Knowing this allows you to understand market flow and hold off on entries, giving markets time to move and shape up.

Significant support exists to the downside and will likely be taken advantage of by longer term investors. Case presented by obvious layers of key price action.